PR take note - 20% CAGR for digital

The latest results posted by WPP[i] and Havas[ii] for their FY2011 show some interesting glimpses into the future of the industry. In both cases, they are doing extremely well, with WPP posting a 10% increase in full year profits and Havas a respectable 9% for the same period. Looking a little more deeply, though and we see that while PR performed well there are some issues on the horizon.

In WPP, while the top line growth for PR at 6.2% was lower than the advertising and media arm of the business, which posted 12.2% revenue growth, PR still increased its profit margin by 0.3% to 16.1%. WPP reaffirmed its long-term target to improve the staff cost/revenue ratio by 0.3-0.6% per annum, with a focus on the application of new technology.

For Havas digital and social media now make up 23% of revenue compared to 19% in the previous financial year. This is a 20% annual growth rate and at this level digital revenues will account for 50% of the firms revenue within 4 years. The Havas CEO, David Jones, referred to this "as another strong year driven by aggressive growth in digital".

The latest research from Kingston Smith W1[iii] indicates that PR bosses are very optimistic about 2012 with 71% predicting greater profits. Perhaps with a greater focus on digital and the application of smart technology, the industry will also be able to rise to the challenge of controlling the cost/revenue while taking back territory from the digital agencies.

With not much legacy in digital, PR has the opportunity for its Estonia moment – to leapfrog the old ways of doing things to move straight to the best available technology and methods just as this fledgling country did when it emerged from the old Soviet Union. This kickstarted their economy and offered immediate benefits to all. Is it time for PR to leapfrog the digital agencies? Let’s hope so.